The SAF Podcast

The SAF Podcast: EasyJet - The not-so-easy path the Net Zero

• SAF Investor • Season 3 • Episode 7

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 In this episode of The SAF Podcast, host Oscar is joined by Lahiru Ranasinghe, Director of Sustainability at EasyJet, to explore the airline’s journey toward net zero. With aviation’s decarbonization at the forefront of industry discussions, Lahiru outlines EasyJet’s three-pronged strategy—Reduce, Replace, Remove—which balances efficiency improvements, sustainable aviation fuel (SAF) adoption, and long-term hydrogen integration. 

 Discover how EasyJet is navigating the complex SAF landscape by strategically securing supply agreements across Europe to meet regulatory mandates while exploring voluntary market opportunities. Lahiru provides candid insights into the airline's SAF procurement strategy, highlighting recent partnerships with producers like ENI in Italy and Moeve in Spain. Whilst acknowledging that airlines "can't optimize their way to zero."

The conversation tackles the SAF green premium head-on - sustainable aviation fuel costs 2-7 times more than conventional jet fuel, yet EasyJet operates with razor-thin margins of just £6.10 profit per seat. This creates a fundamental tension for an airline committed to democratizing air travel. Their pragmatic solution? Focus first on securing SAF partnerships across Europe to meet regulatory mandates while exploring innovative approaches like corporate SAF certificates that allow business customers to address their Scope 3 emissions.

Ranasinghe also gives a candid assessment of the "first-mover disadvantage" in long-term SAF agreements. With future production likely to become more efficient and less expensive, airlines that lock in decade-long contracts today risk putting themselves at a competitive disadvantage tomorrow. This chicken-and-egg problem requires creative solutions like Project SkyPower's proposed market intermediary to bridge the gap between producers' need for certainty and airlines' commercial realities.

 We also dive into EasyJet’s hydrogen ambitions, discussing Airbus' timeline delays, the impact on fleet planning, and how hydrogen-powered aircraft could revolutionize short-haul travel by 2040. Plus, we examine the financial realities of SAF adoption, carbon pricing under EU ETS, and whether passengers are willing to pay a green premium.

You might have noticed a trend for Project Skypower over recent episodes and the work they are doing developing EFuel policy infrastructure, which you can find out more here: https://project-skypower.org/

If you enjoyed this episode, check out our previous episode with Jonathan Pardoe, Star Alliance here: https://www.buzzsprout.com/2202964/episodes/13933438


Speaker 1:

Hello and welcome to another episode of the SAF podcast. This week, I'm delighted to be joined by Lahiru Renasinghe from EasyJet, and today we're going to be having a great conversation around. And today we're going to be having a great conversation around EasyJet's long-term and short-term net zero plans, the roles airlines have in showing demand signals for sustainable aviation fuel, and the recent news and developments that have come about with EasyJet over the last six months, because there's been a lot going on. Lahiru, thank you so much for joining us. How?

Speaker 2:

are you Very well? Thanks, oscar, nice to meet you.

Speaker 1:

Lovely to meet you too. So before we get into what EasyJet's sort of position on SAF and ongoing net-zero strategies, do you just want to explain a bit about your background and how you ended up in your current role?

Speaker 2:

Yeah, sure. So my background is aviation and airline through and through. Studied aeronautical engineering, started life as an engineer over in Bristol working with Airbus before moving to British Airways, first of all in commercial and network planning roles, moved to Virgin Atlantic from there again in commercial and strategy roles before turning up at EasyJet about six years ago, starting life in the corporate strategy team. And while I was in the corporate strategy team, the sustainability team needed to start developing our net zero roadmap. I started working on it as part of the strategy team and then eventually moved across as the head of net zero at easyjet and just taken on the step up to the director of sustainability at the start of this year so in your role as head of sustainability, it's incorporating sort of EasyJet's whole sustainability directive.

Speaker 1:

Do you just want to sort of explain what your short term and long term sustainability strategy is? Because I know recently you published your net zero roadmap where you clearly outline your sort of your strategy. So do you just want to sort of explain what what they are going forward?

Speaker 2:

yeah, sure, so, uh, what? What our team looks after is overall environmental sustainability. So, of course, the flying part of it is a huge majority of our climate, of our climate impact. But beyond just the climate impact, I think, if you look at this in four ways, there's the energy use, emissions, waste and noise. So our team addresses all those, all those areas, and if we look at the environmental components of our strategy, we've got these two pillars that are linked to the environment, which is reducing our impact today for a better tomorrow and pioneering future travel.

Speaker 2:

And all of this is all of this is wrapped up then in the net zero roadmap for the flying, for the flying part of it, and to describe our roadmap succinctly, we use the three R's reduce, replace, remove so that's reducing the energy consumption and the energy requirement. So that's all about efficiency. That's about using the most efficient aircraft that we have, so the A320neo family for us as an Airbus operator, and it's about operating those aircraft as efficiently as we possibly can, and that is through the operational efficiencies that are within our own control, and they vary from fairly physical things such as the use of lighter paint, which we started deploying on our aircraft just a few months ago, and engine washing, which is literally hosing down the inside of the engine to remove particles and make it more efficient. At the other end of the spectrum you've got quite high-tech solutions such as descent profile optimization, which is software package that allows the aircraft to descend towards landing at an optimized thrust setting and therefore burn less fuel and cause less emissions. The other half of that of the efficiencies, then, of course, is airspace modernization, and that's about improving the efficiency of the airspace in which we operate, which hasn't really changed dramatically for about the last 60 or 70 years.

Speaker 2:

And while that isn't directly within our control, we do uh, we, we do contribute quite heavily or we do what we can in that space. So we are an airline partner on the iris program with airbus and via set and that's, and that's trialing out a new generation of satellite communications systems on the aircraft, and we've also recently done an airspace map, which is doing a detailed analysis of our own operation so that we can pinpoint exactly, vertically and laterally, exactly where the airspace inefficiencies are on our own network, because that helps us to then go and identify and work collaboratively with the NSPs, the air navigation service providers, to address that. Now we're doing a lot in that efficiency space already, but this is something that we, that has been part of our bread and butter for almost 30 years of existence and we'll continue doing that going forwards. Because, while we can't optimize our way to zero, fundamentally reducing that energy requirement is the first building block, because that, of course, then reduces not just our emissions but it reduces the amount of SAF that we need, the amount of hydrogen that we need in the long term, because the biggest chunk of the decarbonization of this airline and this industry, of course, is going to come from replacing and that's the second, you know, the second r is replacing fossil fuels with non-fossil alternatives. So SAF, of course, in the various, in the various forms and in the long term, in the long term, hydrogen, and I think we'll be talking about, you know, we'll be talking about that in plenty more detail.

Speaker 2:

Last but not least, on the removal side, it's pretty well known, it's pretty well understood that aviation is not going to get to zero carbon emissions by 2050, but that does not mean that we can't get to net zero by using a portfolio of carbon removals to address what's left over once we've reduced and replaced. So, in a nutshell, that's our approach towards reducing our aviation impact, and that's not the entire impact, but it is 92% of our total emissions. So you can see why this is the. This is really the big ticket item in terms of what we have to address.

Speaker 1:

I think for the purposes of this podcast we're going to spend a lot of time talking about. The second are the replacing when it comes to saff and equally hydrogen. So, speaking of saff, you guys had a very active sort of final quarter, uh sort of last six months of 2024, signing a lot of SAF deals within Europe. I know there was one with move, previously CHEPSA, in Spain. You have one with ENI in Italy. Um, talk us through those and sort of the strategy behind signing those partnerships and why those sort of suits. It easy, yet Sure.

Speaker 2:

So, in short, our SAF strategy is predicated on us meeting the mandates as a minimum. That's not to say that we wouldn't pick up no voluntary SAF if we could, and we are looking at ways that we can do that, including our corporate SAF program, which I can touch on in a minute. But the first step of this, the first building block, is ensuring that we have security of supply to meet our mandates across the different countries that we operate in. And what we've done over the last few months, as you rightly pointed out, is we've got bases right across Europe. I think we have 31 now and we have different suppliers supplying different countries and different bases.

Speaker 2:

So we have gone out to the market to sign MOUs and LOIs with suppliers, for the SAF needs to meet those mandates for a period of years. So in certain cases so for example, you mentioned ENI that's for the equivalent of about 32,500 tons of NEAT SAF over a period of six years, and those will vary depending on the country. For example, the UK is much higher because about half of our fleet is based here. But the rationale behind that is to ensure that we've got the relationships running and that we can convert those LOIs and MOUs into contracts in the short term so that we can access the staff that we need Interesting. You say that it's sort of the staff that we need Interesting.

Speaker 1:

you say that it's sort of these agreements are based to cover mandates, because a lot of the discussion when you talk to producers they're seeing a lot of the demand coming from the voluntary side of the market and aren't necessarily viewing it as people aligning with mandates. But that's obviously your strategy is to meet mandates at a minimum, look to the voluntary market where possible and then so you've got strong relationships so that as the mandates scale you can continue to meet those as they scale up towards 2030 when they start to ramp up more steeply later down the road.

Speaker 2:

Yeah, that's correct and it really, and you know the answers you're going to get are going to depend on, geographically, where the airlines or suppliers are based. Right, because for us we know we have a mandate it's the clearest demand signal that can possibly be, given that the demand is certain and we have to make sure that we meet that demand and meet it at a competitive, competitive price. Because, ultimately, we're here to democratize air travel and, with SAF having the multiples of the price of jet jet that it is, we've got to make sure that we, that we do what we can to manage that, to continue with our mission of of keeping air travel affordable do you do you see the role of an airline as being a long-term demand signaler or do you see that being fulfilled by the mandates?

Speaker 1:

because obviously your operations are very much focused around europe, which is covered by the mandate. Lots of other airlines, global airlines, operate in areas without mandates showing that global demand. So are you very much sitting here, going the mandates, fulfilling the role of a long-term demand certainty sort of mechanism and we're just fulfilling our role within the mandate, as opposed to sort of airlines being the ones themselves by signing sort of longer term agreements as showing the demand?

Speaker 2:

so it's a I mean it's. It's not as, not quite as black and white as that, right, because, uh, yes, the mandates are, as I said, as strong a demand signal as you possibly can give, because you have certainty that it's there and there's no. There isn't a business case for us that says, okay, do we or do we not buy SAF. There is a minimum quantity of SAF that we need to pay for and, by the way I've got to, you know, I've got to remind everyone that the mandate is on the suppliers, as opposed to the airlines. We lend. We end up paying for it because it gets passed on to the end user in in any case, but it is, it is a certainty, and we have to make sure we don't have our eye equations and do we buy SAF or do we not?

Speaker 2:

It's a case of we need this amount of SAF, let's make sure that we've got access to it and we've got it at a competitive price.

Speaker 2:

That does not mean that we do not want to also buy voluntary SAF.

Speaker 2:

That does become a commercial decision, and there is. You know, conceptually, I can say that if we were able to buy SAF at the same effective price as we would for a ton of jet. There's no reason why we wouldn't buy as much SAF as we possibly can, and this is something which we'll be looking at, especially with the uets allowances how we could possibly leverage those to lock in staff for the longer term. But also the corporate environment, because we have just done this proof of concept with airbus, whereby we are almost acting like a broker where we're buying SAF on behalf of the corporate customer, we're having it delivered to one of our airports Toulouse in this case and we're using that to generate scope three SAF certificates that can then be used by Airbus as a corporate traveler to address their scope three business travel, science-based targets and the whole idea here is that there's potentially a win-win situation here where you've got corporate travellers, especially those in the services industry, for whom travel is a big part of their emissions footprint.

Speaker 2:

They need to address their emissions. We as a whole need to scale up the SCAF industry to be able to decarbonise this industry and continue to have a license to operate, and we have the opportunity, almost as this middleman, to buy SAF on their behalf and kill two birds with two birds with one stone. Now, just going a little bit broader on your question about, you know, voluntary or men or mandated SAF voluntary SAF and I'm talking about other parts of the world. Now, the case to buy SAF depends on a number of things. It depends on, of course, the cost. It depends on the cost benefit ultimately, and for that cost benefit you need to see that there is interest or, I guess, benefit or reward from the consumer side which rewards you for taking steps towards being more proactive on sustainability. That then feeds into demand and perception on the investor side and that ultimately will help to drive those business and drive those business decisions.

Speaker 2:

To pick up, voluntary SAF, Like I said, for us it's how much more do we buy, as opposed to do we buy or not. But a part of the puzzle that is not there at the moment and that, frankly, we're seeing headwinds against right now is consumer perceptions and consumer demand and preference for any kind of activity. That is especially on SAF. That is to do with being proactive on sustainability. The exception to that, of course, is the corporate market, because now you're talking business to business. They've got their own targets.

Speaker 1:

We have an opportunity to work together to address them you mentioned price there, um and this is obviously the biggest one of one of the biggest problems or things that the saf industry needs to sort of come to terms with is that it is two to seven times, depending on the the pathway more expensive than jet fuel. Is that the major consideration you go into when you're signing an LOI MOU to to sort of get access to your SAF, or are you looking at sort of other things like longevity, the sort of the volumes where it can be distributed, what? What do you look at when you're going into signing your your offtake agreements?

Speaker 2:

and, once again, because of uh, because of the mandates and the operating environment, we know exactly what uh, you know what, what standards it needs to meet. Um, either, if you're the? U, read to uh, read to or, or the uk regulation um, and we know that and we know the specifications under which we have to get that SAP delivered. We know it's mass balancing, we know it has to be delivered within the UK or the EU. So, with that in mind, it's really making sure that those basics can be met and then, beyond that it's, can the volumes that we need be met and is the price attractive for us?

Speaker 2:

And thinking about the longer term, the challenge here is not just on pricing, because it's also on the long-term certainty that's needed by producers, because a big challenge that we have is a lot of a lot of what we hear about is long-term off-take agreements. You know you need 10-year off-take agreements and and so on. The challenge with that is not just on the cost multiple of SAF, it's also the fact that we are currently talking about first-of-a-kind plants that will inherently have disadvantages versus those that come after them. And you're in a position here of where, how can you possibly invest in? How can you possibly go for those first-of-a-kind offtakes and lock yourself in at a price for a long period of time, knowing that what comes after that is most likely going to be more efficient, going to be cheaper, and therefore, if you've locked yourself in, you're immediately at a competitive disadvantage.

Speaker 2:

And we've got to bear in mind that we are a high-volume, low-margin industry as well. I mean, last year EasyJet's profit margin was £6.10 per seat flown. We flew 100 million seats, which is how we ended up with a really strong profit. But those margins that we're talking about are relatively thin. If we, as an example, if we started off with a long-term off-take agreement that committed us for 10 years and our competitors then went later and then managed to get any kind of percentage improvement on that because you're talking large baseline costs now that means that we'd immediately be at a competitive disadvantage. And therein lies the big challenge when it comes to the airline or any kind of offtakers perspective, because what's being asked or expected in a way, is for those who go first to be accepting a competitive disadvantage in a highly competitive, low margin industry, and that's not an equation that can be balanced out at the moment.

Speaker 1:

I suppose that's where the argument comes for the corporate customers, because they can shoulder this green premium potentially to a higher degree than airlines can. It's a well-known fact that about 30% of costs are fuel-related for airlines. So if corporates buying the Scope 3 SAF certificates associated with the fuel can help shoulder some of the burden of that, you could end up seeing a more. If you were to sort of look at long-term agreements, sort of more tripartite arranged offtake agreements, we get corporates taking the scope 3 certificates for the length of the offtake agreement the airlines take the fuel and thereby not being so exposed to those that green premium. Obviously, as you mentioned, with sort of second and third generation plants coming online, do you see that becoming a sort of a building block on which sort of you can there can be built, sort of going on from your um partnership and work you did with Airbus on looking at something?

Speaker 2:

to be honest, I think even there is a, there is definitely a role for corporates to play, but to be playing on that kind of time frame, that's quite a that's quite a tall ask and where I have seen this addressed, uh, in an intelligent way. So we are part of Project SkyPower. Our CEO is on the steering committee for Project SkyPower, which is a consortium that's Europe-wide. It covers the whole ESAF ecosystem and the mission there is to get ESAF plants power to liquid plants, to find an investment decision by the end of 25 or early 2026, so that we can actually have a pipeline of supply to meet the mandates in 2030.

Speaker 2:

Now ESAF the challenge with ESAF is like the BioSaf challenge on steroids because of the much more significant cost discrepancies that we're looking at there and what they have proposed is for a market intermediary, because they've recognized that you've got a complete disjointed position here where disjoint is probably wrong, but you have a position where producers need long-term certainty and off-takers cannot provide that long-term certainty because there is that inherent first mover disadvantage.

Speaker 2:

What they are proposing is a fully capitalized, government-run market intermediary, so using the same principles and potentially using H2 Global, but when there is a supply side auction for the suppliers and that this market intermediary provides those long-term off-take agreements and, on the other side of it, has the demand side, auctions or direct sales. That can be done on a two or three year offtake agreement, which is much more manageable than in that case for the likes of us recognising that there is this gap that is nigh on impossible to backfill in a simple way, and that there's this middle ground, there's this middle man that's needed to be able to address it, and that's something that's in their policy paper. If you've not seen it yet, I'll put a shameless plug out there. It's definitely worth a read because it's a very comprehensive piece of work on ESAF, but it does apply to the broader ecosystem and really anything to do with technology-based decarbonisation.

Speaker 1:

I think I think a trend of podcasts for 2025 for guests on here is plugging Project SkyPower. We had Breakthrough Energy on the other week and it came up quite a lot. So this is the second time in a couple of weeks it's come out. So I think before long everyone will be familiar with what Project SkyPower is doing. But I think you're absolutely right in, the aggregation of demand is one of the solutions to actually creating longevity in that demand. Individual companies or entities can't be exposed to the longevity of demand that producers require, so the ability to aggregate it and compile it so that there is certainty for a producer and an investor is is of paramount importance.

Speaker 1:

Um, another thing that some of your one of your low-cost competitors have done is they've put investments into early stage projects. So Wizz Air invested in Firefly, who are doing producing Saffron Sewage here in the UK. They're starting a project in Essex. Have you, easyjet, ever thought about, you know, being an investor, looking at sort of inputting capital, sort of into early stage new technologies? Or was that not part of your ongoing strategy?

Speaker 2:

I mean, we've always got an eye on all the possibilities and, you know, as this picture evolves, we're also trying to understand the different steps that we can take and we're considering all the possibilities.

Speaker 2:

Clearly, we haven't gone down that path just yet and one of the things to consider is, like I said before, we've got bases all over Europe. Our network and our base structure is fairly dispersed and so we need to have supply in a lot of different countries and ultimately it's supply. We're trying to get SAF as a blended product and even if we went down the path of in, or if anyone went down the path of buying directly from a producer, there's still the requirement to have the logistics and the distribution to blend it with fossil jet fuel and deliver it to an aircraft wing. So it's a little bit more complicated than going directly to a producer and having it all sorted. But, like I said, it's an evolving situation. Things are changing. It's a big challenge for us as an industry, so we've got eyes open on everything that's possibly available to us one of your sort of longer term strategies is transitioning into hydrogen aircraft.

Speaker 1:

That's sort of your, I think, post 2035 plan. I think if my date, if I remember correctly something around those times maybe slightly, slightly later, is that right?

Speaker 2:

So, looking initially at 2040 as the entry into service, we've clearly had the news from Airbus over the last couple of weeks. That pushes it a little bit to the right. But once again, this is delay in the aircraft coming in, partially because of the fact that the production and the ecosystem has to be developed. But that doesn't change the fact that we still believe that we are going to need hydrogen and that it's going to be an important part of the future roadmap, not least because of the fact that it actually gives us the chance to be zero emissions, or zero carbon emissions at least, but also on an energy ecosystem level.

Speaker 2:

If we are looking at a world where we have to rely quite heavily on power to liquid or ESAF, there's a big energy discrepancy that's needed on a systemic level. That's a massive proportion of the world's renewable energy resources that would have to be dedicated to the aviation industry. Now the studies that we've seen from our partners and from the likes of FlyZero suggest that you're looking in excess of 30% improvement in that energy efficiency when it comes to the use of hydrogen aircraft. So while on the one hand, staff is quite easy for us because the pipes are the same, the planes are the same, more or less. It might mean that you need an extra wind farm further up the road to be able to provide that energy, whereas on hydrogen it's the opposite end of the spectrum where we've got to deal with it much closer to home, very challenging, but it's still something that's an important part of our roadmap and we'll continue to work on it as we have been.

Speaker 1:

Does this delay from Airbus? Now there is a trend when you're looking at hydrogen and electric. Electric they are very capital intensive, very um challenging technologies to develop and particularly when you put it in the second most regulated industry in the world, in aviation, there's a lot of hoops you've got to jump through before you can get those aircraft operational. So those delays, do they affect your staff strategy at all, or do you just sort of extend what you're currently doing, just keep meeting mandates? Or do you foresee or you sort of working on adapting your, your SAF plan to sort of mitigate those delays?

Speaker 2:

so we've always built our roadmap and our strategy in a way that we, in a way that recognize the delivery risk, because there's nothing here that's without delivery risk. Right, even the SAF aspects of it. Mathematically it works. There's still a lot, and you know, he said, hydrogen is capital intensive. Saf is capital intensive, as is, and as our fossil fields. It's just that the capital has already been already been invested, as have you know, as has the support as far as our roadmap goes.

Speaker 2:

This is something. This is not something that we built in 2022 and said, okay, that's it, that's how we're doing it. This is, as I said at the start, it's a living, breathing beast. As things, as things, change, we adapt it with, uh, with hydrogen, uh being delayed. That doesn't change the fact that we have those targets. It doesn't change the fact that we have those ambitions. What you see below the line is there's something that looks a bit like a layer cake or a milfoil, which has the way we pull the different levers at different times, to different extents. That changes as a result, at different times, to different extents. That changes as a result. So, yeah, saf does become more prominent in the longer term, but, once again, that's flexing what we already had within it, as opposed to any kind of wholesale changes.

Speaker 1:

I'm very impressed you got Milfoy into a conversation about SAF. That's seriously impressive.

Speaker 2:

Thank you. You've got a podcast, so I've got to try and be entertaining for our listeners.

Speaker 1:

Well, you've certainly done it there when it comes to. Obviously, you said you had a great year last year in terms of passenger carries, and the stat that you're making £6 profit per seat is actually quite eye-opening. That's a really interesting statistic. How are you seeing passengers if they're sort of looking at SAF? Are you seeing them getting more concerned about it, or do you think there's a willingness to pay? If they're, they had to because obviously, as a low cost airline, you want to keep your costs, you know, per seat, as competitive as possible. So Do you see there being a willingness to pay and an understanding of the benefits of SAF from your direct, non-corporate customers?

Speaker 2:

Depends A lot of our customers and actually a lot of people who do travel, travel very infrequently and you're talking your once a year holidaymakers, once every couple of year holidaymakers.

Speaker 2:

And for someone who's traveling that infrequently, air travel is not something that they interact with often enough for them to need to have that kind of familiarity. That's asking too much of them and, as we explained, this is a complex solution to complex problems. When it comes to those who are more frequent travelers and I suppose there's probably a bit of an overlap between frequent leisure travelers and frequent, frequent corporate travelers uh, once again, as far as we can see at this point in time, there isn't a massive amount of uptake. They do have a lot of travelers who are familiar with travel, do see the need for aviation to address its climate problem. I see this as something that needs to be done in the long term to preserve those benefits of travel, but at the moment moment they don't see it as their issue to solve. They see it as an industry, as an industry issue to solve would you ever consider passing you know the costs of SAF to.

Speaker 1:

You know cover the premium, so you're not so exposed onto customers. Or is that not something you consider or aren't considering currently in my review in the future?

Speaker 2:

I mean, the reality of it is that for any business, we've got to cover our costs right. So any cost increase that comes in is ultimately going to have to be going to have to be passed on, and we are subject to escalating costs associated with sustainability because not only the SAF mandate is coming in, but we've also got the emissions trading scheme, the ETS, which applies to about 80% of our flying. That's also increasing in cost, which ultimately will have to be passed on to the customer. Now our whole mission and our whole raison d'etre is to democratize travel and to keep flying affordable for everyone, and that does not change. And we have a laser focus on controlling our costs and managing those costs as much as we possibly can. What I would say is that to make sure and managing those costs as much as we possibly can. What I would say is that to make sure that we still preserve those benefits of flying for those who fly and to also the millions of people who are putting bread on the table because of flying, that we do also have support from the government side in terms of managing this transition and managing these costs.

Speaker 2:

And this is not at all to say okay, going cap in hand, the government saying, okay, we need some cash because we are subject to quite significant taxation in the form of air passenger duty here and ETS.

Speaker 2:

If you take the EU ETS, for example, last year there was 53 million tonnes of carbon.

Speaker 2:

That was within the ETS at about 80 euros a pop.

Speaker 2:

That's 4 billion euros of revenues from the airline industry. And actually what the EU is doing is the EU is using some of those credits the 20 million credits that I earmarked right now to close the green premium or to narrow the green premium for SAF that's purchased as part of the mandates. That's a positive step and that's the kind of thing that we need to see in the UK as well, and we need to see an extension of. We definitely when I say we, the whole industry would like to see an extension of those 20 million credits to help us recycle those revenues, recycle those tax revenues in a way that helps us to manage the cost and keep flying affordable. So, once again, very difficult to give a simple answer to that, but there are ways. The costs are going to go up, but there are ways for us to manage it so that we don't go back to the bad old days of only the privileged few being able to fly, so that we don't go back to the bad old days of only the privileged few being able to fly.

Speaker 1:

Do you think governments are doing, you know, the right things? If you've spoken a lot about the UK and EU and there are some differentiators between the two, obviously you know you guys sort of work closely with them, you'll have discussions with them. Do you think they're, broadly you know, putting the right policies, incentives, requirements, tax requirements in place to encourage, you know, the airlines to do what they need to, to encourage and meet mandates and encourage investment, encourage production and get all the bits in place that are needed to get production scales scaled? So are they doing all the bits in place that are needed to get production scales scaled? So are they doing all the right things from your perspective, or is there sort of stuff?

Speaker 2:

they could do. There's more that needs to be done. Quite simply, from the EU side, there's the expansion, or the extension of those 20 million credits to give the industry more visibility of what the future is going to hold, so that it gives us more confidence about making those slightly longer term investments. From the UK perspective, there's more to be done in the form of really following the EU and helping to close those cost gaps, once again not using any other kind of tax revenues, but using the environmentally related revenues that are collected from the airline industry in the first place.

Speaker 2:

What we have seen on the other side of the pond, of course, is the inflation reduction act, which has really helped to stimulate production over there. And if you, if you ask me, really we've got two. We've got two sides on on either side of the pond, um, where you've got the stick approach in the eu and the uk, you have the carrot approach still in the US. What you want to see is actually the offspring of those two approaches, because we can still see that, while the mandates provide the certainty of demand, it is still not quite getting there in terms of providing the certainty that investors need to put a billion or two into a SAF production plant need to put a billion or two into a self-production plant, Although you are seeing in Europe there are sort of mini carrots.

Speaker 1:

When you sort of look at the proceeds from EU ETS, lots of that goes into sort of developing new technologies and various other investment related benefits that can be seen that go alongside a mandate.

Speaker 2:

So very broadly, yes, the EU does use a stick and the UK uses a stick, but there are sort of baby carrots, as it were, sort of yeah, and we're seeing progress, and that's always a positive because it's also, you know, governments on either side of the channel are recognising the importance of connectivity and, yeah, as you say, things are progressing, but there's a lot more that needs to happen and it also needs to happen fast. Once again, I will say that SkyPower but for anyone who's not interested or has not seen that report, it does provide a, it does provide a pretty strong blueprint for a very challenging topic was that a second plug in one podcast for project sky power you will probably get a third one before this hour is done as well I probably need to wrap up pretty quickly.

Speaker 1:

Then, going back to the beginning you mentioned there are sort of four things you're trying to mitigate. You've got waste, your energy emissions. I can't remember the fourth one at the top of my head. You might have to help me out noise noise that's. It is emissions the hardest or or the most sort of challenging one, or do they all have their different challenges?

Speaker 2:

I'm assuming none of them are easy none of them are easy.

Speaker 2:

They've all got their nuances. Uh emissions is the easiest one to calculate and the hardest one to address, because it does take a lot of energy to have an aircraft, to get an aircraft off the ground and to get it traveling any kind of distance. And fossil fuels are, as an energy carrier, a very, very effective energy carrier. So moving away from that is very challenging. So the example that we'd always give is one of our A320s has a capacity for about 18 tons of fuel. 18 tons of fuel could probably get you from London to Dubai. Just about 18 tons of batteries, as you'd get in any modern EV, would get you just about up to the channel. That's the difference in energy density and therefore it is a massive, massive challenge and that is really the core of the challenge.

Speaker 1:

Amazing. I think this has been great. Thank you so much, lahiru. I think we'll wrap it up there. Thanks so much for joining us.

Speaker 2:

You're not giving me a chance to say Skype over a third time. Oh, I just did.

Speaker 1:

I thought I got away with it getting twice. But there you go, you got it a third time.

Speaker 2:

Thanks, Oscar.